Cotton On says megastores are the way forward

Australian retailer Cotton On Group is turning its stores into megastores housing several of its brands, a move it says has increased the number of its customers

"Emporium" and "department store" have almost become outdated twee words, but, as things have a way of coming full circle, the types of stores they define could become the popular format of the future.

Australian retailer Cotton On Group, at least, is putting its focus on expanding in that direction with what it calls megastores - large retail areas of at least 1,600 sq ft in size, housing several of its brands under one roof.

The group, which opened its first Singapore outpost in 2007 at Wisma Atria, now has 82 stores here across all its brands. Of these, 16 are megastores, including a 7,000 sq ft outlet that opened last Thursday at Jurong Point in place of the 1,200 sq ft standalone Cotton On store that was there previously.

During the current financial year until next June, the group plans to open 25 new stores in Singapore - the majority will be larger stores replacing existing ones - in both city and suburban areas.

"(This is) our preferred way of retailing today," Mr Michael Hardwick, Cotton On Group's chief financial officer, tells The Straits Times last week while he was in town to celebrate its 10th anniversary in Singapore. "We think it gives us our best opportunity to put our best foot forward to create an experience that is a little bit different for our customer."

The move, he says, has almost doubled the average basket size of customers, compared with standalone stores, as "customers get the opportunity and the convenience to cross shop" across the brands.

Cotton On Group operates six brands here - Cotton On and Factorie for casual basics; Cotton On Body, which offers activewear, sleepwear and intimates; Cotton On Kids for infant and child clothing; Rubi for shoes and accessories; and Typo, which offers quirky gifts and stationery.

I think we all want to be able to connect more with what we're buying. We want exclusivity, but we want it at a value price point.

MR ANDREW WOOLCOCK, Cotton On Group's Asia country manager, on its upcoming move to offer free personalisation services to customers at some of its megastores

"Today, the sales coming through our megastore format account for more than 50 per cent of our sales in Asia," Mr Hardwick says. "For a concept that didn't exist five years ago, I think it shows the constant evolution of the brand.

"That, for us, is going to be the key to our sustainability as a retailer."

A handful of other retailers here also believe in larger spaces.

Sporting goods retailer Decathlon opened a 43,055 sq ft megastore in Joo Koon in May with a putting green and a mini-football arena. Local clothing label In Good Company's Ion store includes a cafe and children's play area.

Likening Cotton On's move to a revival of sorts of the department store format, Singapore Polytechnic Business School senior retail lecturer Sarah Lim says that this strategy works for a retailer like Cotton On because it targets a specific demographic - the younger, trendier segments of the population.

"(Traditional department stores are) for everybody - father, mother and children," she says. "But here, they are very focused on who they are serving. It may work because the store image can be created specially for this group, from the music that is played to the salesmen chosen.

"The target consumers will feel good because they are surrounded by the same kind of people," she says, adding that a bigger store size also allows for better experiential retailing. "I think the size helps. Once the store is big enough, you can play with music and ambience."

The megastore format, says Mr Hardwick, also creates opportunities for further expansion.

The large floor area means that there is space to test new product concepts to see if they take off. This was how, he says, Cotton On Body evolved into a brand of its own - it started out as simply a part of Cotton On's offerings.

Cotton On Group itself has evolved prettily: Founder Nigel Austin started trying to convince the residents of Geelong, near Melbourne in Australia, to cotton on to his sartorial ideas in 1988, selling denim jackets from the boot of his car. His supplier happened to be his father, a clothing wholesaler.

After interest in his product started to pick up, Cotton On was officially established in 1991 and today, Cotton On Group has more than 1,500 stores in 19 countries and 11 e-commerce sites in seven countries. Mr Austin, 47, remains at the helm of the group.

Singapore, where the company's regional headquarters is located, has the highest concentration of Cotton On stores in the world - one store per 9 sq km. In Hong Kong there is only one store per 459 sq km.

The Republic does not seem to have been a tough sell.

"(We had an) immediate connection with the customer, both because of the fashion ability and the value proposition that we were bringing into the market," says Mr Hardwick, 50, who is Mr Austin's cousin. Singapore now represents about 17 per cent of the group's business.

The challenge, he says, is the stiff competition here.

He describes the country as "the place that forced us to get better because of the competition we were up against".

Mr Andrew Woolcock, 37, who joined the group a decade ago and has served as Asia country manager since last year, says it overcomes this by listening closely to the customer, especially when it comes to demand for trends and value.

Singapore customers are much more trend-oriented than the ones in Australia, where the group has 795 stores, he says, so getting new, on-trend designs quickly into stores is a priority here.

For example, dresses were not popular items here in the last two seasons, but this season, some new cuts and jersey knit materials were strongly received, so dresses at the moment make up "a third of our footprint within womenswear", he says.

When it comes to day-to-day operations, it is also about being able to react quickly to consumer demand. For instance, during the Formula One period, Suntec City's Cotton On megastore - the largest, at more than 14,000 sq ft - has increased the number of stock deliveries to ensure that popular items are always in stock.

Such customer engagement, Mr Woolcock believes, is behind the group's success, enabling it to expand at a time when there have been "closures of other brands" and "the retail index is down around 12 or 13 per cent for Singapore".

As for further expansion, he says the way forward will be to turn existing stores into megastores, not about opening more stores in more locations.

"There are (only) a certain number of shopping centres in Singapore and we're in the vast majority of them," he says, adding that the group's revenue has grown at about 10 per cent for the past five years.

The next big thing is to allow customers to put their own stamp on items - in line with the wave of customisation offerings on the market. Brands ranging from Prada and Gucci to Nike and Converse have been offering customers the option of personalising their bags, shoes and apparel.

In November, Cotton On megastores at Suntec City, VivoCity, 313@Somerset and Bugis Junction will jump on the bandwagon, offering pop-up vinyl printing, hot stamping and embroidery services for certain products at no additional charge.

"I think we all want to be able to connect more with what we're buying. We want exclusivity, but we want it at a value price point," Mr Woolcock says of the move.

Last Thursday, at the opening of the Jurong Point megastore, shopper May Du, 26, picked up two shirts and two hats.

The business development executive, who lives in the area, says she enjoys the variety of products at the megastore, which houses Cotton On, Cotton On Kids and Rubi.

"If you have more things, that's always better," says Ms Du, adding that she likes the idea of personalisation. "It will make the clothes more fun and meaningful."

5 items to zoom in on at a Cotton On megastore

1 Graphic tee from Cotton On, $19.95 

Cotton On's licensed graphic T-shirts featuring pop-culture icons, such as Star Wars' Yoda (above), The Muppets or band logos, are immensely popular here. Singaporeans snapped up one million of them between July last year and June this year.

2 Shorts from Cotton On Kids, $24.95

Add extra fun to pool time with the kids with these adorable patterned shorts, which change colour when wet. The shorts come in two colours.

3 Backpack from Typo, $29.99

Disney-themed products are always bestsellers in Asia, Cotton On Group says. Those who like Mickey Mouse should find this backpack a burden easy to bear. 

4 Slides from Rubi ($14.95)

Slides are in and why not? They are comfortable, all-purpose and water-resistant. They are also a good choice for customisation via the personalisation services that will be offered in selected stores from November. Members of the whole family can each have a pair without getting any mixed up. Rubi's Havana slides come in six colours, four of which can be personalised. 


5 Loop & Scoop Crop ($34.95) and Loop Back Crop Tights ($59.95) from Cotton On Body

Every girl knows that a cute outfit is as good a motivation as any for putting in that extra effort at the gym - or simply giving her an excuse to get out of the house. Pair a crop top with tights and feel free to mix and match patterns. The tops come in six colours and the tights in two.

May Seah 

A version of this article appeared in the print edition of The Straits Times on September 14, 2017, with the headline 'Under one roof'. Print Edition | Subscribe